What qualities does your business need to have to keep it real and profitable?
What the heck happened to the ecommerce revolution? Countless articles now examine the corpses on the side of the information superhighway. Amazon.com is taking one punch after another. CDNow was picked up for a dime by Germany’s Bertelsmann. Drkoop.com is checking its wounds to see if they’re really fatal. And these are the companies that were supposed to be exceptions to iffy dot.com ventures.
Does that mean the Internet is no longer an option as a way to launch a new company or to extend an existing business? Of course not. The Internet continues to grow at a staggering pace. Ecommerce is increasingly global, offering new opportunities and new markets for Internet companies. All of the promise of the Internet still exists except for one: the Internet is no longer fertile ground for a weak business whose goal is to grab inflated IPO dollars.
It’s time for e-companies to get real. Real means a business plan that shows red ink turning black in a reasonable length of time. Real means that you plan to deliver needed good or services to customers at a profit. Real means your concept is as down-to-earth as a retail store in a mall, with products that match the traffic and margins that cover the rent.
Here is a checklist of qualities that keep a business real:
1. Find a niche
You can’t run a superstore on the Internet. Amazon.com is profitable with books. It may end up profitable with it’s huge range of products, but that’s still uncertain. If Amazon.com stayed in its book niche, the question would be over and Amazon.com would be a widely-celebrated, highly-profitable business.
2. Lead your niche
It’s not enough to be an also-ran in your niche. You have to offer something that consumers cannot find anywhere else. If you can’t be the best fishing site, try to be the best fly-fishing site. Find a spot you can dominate.
3. Use a profit-based model
Figure out how you’re going to make a profit before you go into business. Many of the dot.com failures come from companies that were more interested in grabbing Internet space than they were in defining how they could become profitable.
4. Create multiple revenue streams
Look for a number of ways to create sales. Figure out what your customers need beyond your product line. Do they need travel related to your products? Do they need books? Are there advertisers who need to reach your customers?
5. Focus on core competence
Even as you look for multiple revenue streams, keep it in your niche. Make all of your revenue come from the heart of your niche knowledge. If you’re a fly-fishing site, sell travel arrangements to trout steams.
6. Tinker to profitability
Experiment with your revenue possibilities. Test and tinker. You may find that your greatest source of profits come from a small side-line that you added because a number of your customers asked about it.
7. Don’t forget global markets
Most small sites turn away foreign sales because the problems of logistics and currency exchange are too difficult. Well, solve those problems by outsourcing to companies that are all too happy to handle foreign delivery.
8. Grow on talent
As you grow, bring on talented staff. Creative, knowledgeable workers are the gold of ecommerce. A great business, online or offline, consists of a team of talented people, not one or two.
9. Stand on the shoulders of giants
Use affiliations to reach into new markets. If you have a fly-fishing site, link up with a general fishing portal. Tie into a monster site like Yahoo! or AOL. Large Internet companies welcome affiliations with niche sites.
10. Dig a deep trench over the horizon
A friend once told me her Dad’s greatest advice was, “Dig a deep trench over the horizon.” You need to keep digging into your niche as far as you possibly can. The trench is your focus, and the horizon is the vision that grows well beyond your early efforts.
